Intel Aims Higher on Flurry of Positive News
Intel Aims Higher on Flurry of Positive News
The company’s stock surged 11% as its foundry spin-off and $3 billion in government funding boost investor confidence
- The Intel rally continues as traders cheer recent developments.
- Spinning off its foundry business will likely give Intel access to capital flows.
- Government money remains another tailwind for its business.
Intel (INTC) traded nearly 5% higher this morning as yesterday’s rally continued with traders cheering a recent move to spin off its foundry business. Only two days into the trading week, and INTC is up over 11%, marking its best weekly percentage gain since November 2023.
Monday’s move was spurred by news that Intel would spin off its foundry business, known as IFS, from the larger company. This decision was met with enthusiasm from investors, who see it as a way to open new capital flows into the foundry operations. It should also help Intel increase its customer base with clients who compete directly with Intel.
The foundry business also scored a big prospective client with Amazon (AMZN), marking a notable first big win for the new business segment. Investors see the move as a jumping-off point to help it compete with rivals such as Nvidia (NVDA) amid a rush among companies to gain artificial-intelligence superiority.
Other news that came out of a board meeting last week promotes the ongoing efforts of cutting expenses as Intel works on its long-term turnaround plan. Intel will sell some of its stake in Altera, which it acquired nearly a decade ago with plans to take the company public.
The good news didn’t stop there, however, as Intel announced it can get up to $3 billion from the United States government. That money will have to be used to advance its manufacturing of chips for the military and ensuring it has a safe supply of chips for defensive applications.
Does this mark the turning point?
The rosy news comes after a downbeat earnings report that Intel released in August, which caused a big drop in the stock price. That move saw shares trade at the lowest levels since 2010.
The price point sparked some interest from value investors. And for those who believe the company can still successfully navigate a turnaround, it makes a compelling case for long-term investors. Given there are still plenty of investment opportunities for Intel to deploy capital via the Chips and Science Act, the roadmap for U.S. chip producers is bright.
Trading Intel
Intel is trading with some decent implied volatility, given its implied volatility rank (IVR) of 76.8 as of today. Employing a strategy that benefits from the price staying above the recent swing lows just above the 18 handle could be attractive.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.